This paper examines how the organizational structure of the defined benefit pension fund industry influence the investment decision and performance of pension fund managers. Corporate treasurers, who have an incentive to reduce their own job risk, tend to hire pension fund managers with low tracking error. This may constrain pension fund managers in their ability to implement certain profitable investment strategies. Consistent with this hypothesis, I find that relative to mutual funds, pension funds engage in less active management, are less aggressive in implementing momentum strategies, and are more likely to tilt their trading towards stocks in their benchmark. Moreover, these investment decisions have important performance implications. If pension funds implemented mechanical momentum strategies to the same extent as mutual funds, they would enhance the gross performance of their trades by roughly 30 basis points per quarter. In addition, the trades made by pension funds in stocks outside of their benchmark significantly outperform their trades in benchmark stocks. After controlling for risk and transaction costs, I estimate that pension funds tendency to tilt their trading towards stocks in their benchmark weakens the performance of their trades by roughly 30 basis points per year. The results suggest that the additional layers of delegation in the pension fund industry generate economically meaningful agency costs.